The Korea Local Administration Review

This paper analyzes whether the financial resources for local education are appropriately funded for fiscal equalization among local educational authorities in Korea. We study the characteristics of the educational finances using the general grant for education. The results are listed as follows. First, the proportion of local tax revenues that local governments should transfer to local educational authorities is different among regions, which distorts the fiscal equalization. A higher proportion and a higher tuition tends to be imposed on a region with a stronger fiscal capacity by law. Secondly, the standard financial demand for education is mostly measured in favour for a region with lower fiscal capacity. Taking the both results together, if a region has a lower fiscal capacity, its standard financial demand could be overestimated while its standard financial revenues could be underestimated. It will cause fiscally excessive equalization, as the general grant for education is allocated too much to a region with a low fiscal capacity and too small to a region with a high fiscal capacity. So we need to reform the educational general grant system for an appropriate fiscal equalization.

□ Keywords: General Grant for Local Education, Fiscal Equalization among Local Educational Authorities, Differential Financial Burden for Education among Regions